BLOCKSTREAM ASIC

The BASIC structure will primarily acquire unused next generation ASIC inventories from on-shore (North American) or global holders. Examples of models the Company may purchase and hold include: S19J Pro + 122 Th/s, 27.5 J/Th; S19XP 141 Th/s, 21.5 J/Th; M50s + 136 Th/s, 24.0 J/Th; M50s 120 Th/s, 28.0 J/Th; M50s 130 Th/s, 26.0 J/Th; > 28.0 J/Th new machines at favorable discounts priced in BTC.

Investment in ASIC miners carries significant risk due to rapid technological advancements. Newer, more efficient models may render above mentioned models obsolete, impacting their resale value. If more efficient models enter the market within our holding period, our ASICs may become economically unfeasible for Bitcoin mining due to higher energy costs. Additionally, Bitcoin price volatility could affect the profitability of mining operations, influencing demand and prices for ASICs.

Once acquired, ASICs will be insured by a recognized insurer and held in the secure, bonded first-class warehouse facilities until resale. To ensure diversification, no more than 40% in purchase value of ASICs may be insured by a single insurer at initiation of the insurance.

Storing ASICs in warehouses carries inherent risks. While they are insured and held in secure facilities, potential risks include physical damage, theft, or natural disasters that could impact the warehouse. Insurance may not cover all losses, and claim settlement can be time-consuming. Diversification of insurers mitigates risk, but if a single insurer (holding up to 40% of our ASICs' value) fails, significant losses could occur. Additionally, warehousing costs may rise unexpectedly, impacting profitability. Lastly, any delay or failure in selling the ASICs at maturity could result in storage cost overruns.

The ASICs are expected to be stored in first-class warehouse facilities in the North America. At the moment no other jurisdictions are considered. However, this may change. 

Any changes in regulations regarding Bitcoin mining and equipment could affect the market value of ASICs. For instance, stricter environmental regulations could impact the demand for ASICs. Additionally, changes in tax laws, such as increased import duties on hardware or changes in depreciation rules, could affect the fund's profitability. Also, any geopolitical instability or trade restrictions could disrupt the supply chain, affecting the BASIC's structure ability to buy or sell ASICs.

Historically BTC and ASIC prices have been highly correlated. Year-to-date in 2023 that correlation has weakened due to a number of factors (energy prices, available hosting capacity, capital markets dislocation, etc.). We expect the BTC and ASIC price correlation to strengthen going forward, but there is a risk that ASIC prices will remain depressed.

There's a risk that ASIC prices may remain low due to factors such as energy costs, hosting capacity, and market disruptions. If Bitcoin prices rise and ASIC prices don't follow suit, it could impact BASIC's profitability. Additionally, if energy prices remain high or increase, it could depress demand for ASICs, keeping prices low. Similarly, if hosting capacity remains limited or capital markets continue to be volatile, it could further weaken the correlation, affecting the BASIC Note's returns.

In alignment with MiFID II regulations, professional investors can invest in BMN2 with a reduced minimum investment amount. To learn about thecriteria for a professional investor status and the qualification process, click here.

Professional investors can invest in BASIC from US$ 5,000 in the primary issuance. A service fee of 1.5% is charged on the subscription amount. For investments exceeding the specified minimum investment threshold, the 1.5% fee will be waived.

To initiate the professional investor qualification, apply with one of the forms below: 

• Apply as an individual
• Apply as a company

We ask for the Tax ID since this offering falls under specific reporting requirements. For example the Common Reporting Standard requires investors to provide more information on their tax status.

Your tax information will be disclosed to the Luxembourg tax authorities annually for tax compliance purposes required by the Common Reporting Standard implementation.